AWR Automotive signs on as dealer for Chinese auto giant

Thursday, Apr 09, 2015

Dongfeng models to be available from mid-July as dealerships aims for volumes

The rush of Chinese automotive brands into the UAE continues with the AW Rostamani Trading signing on as exclusive dealership for Dongfeng Motors’ passenger cars. The first of the two models — mid-priced S30 (from Dh39,500 for retail buyers) and the H30 crossover (Dh41,500) — will be available by mid-July and more versions could be on the way.

“For too long, the Chinese automotive giants were too intent on selling into their home market — the world’s largest for new passenger cars {21.3 million expected this year, though growth rates are slowing},” said Michel Ayat, CEO of AWR Automotive. “But the Chinese government is giving plenty of incentives for their leading manufacturers to raise their export volumes.”

Dongfeng Motors has a lot of clout and not just limited to its home market. Recently, it put in $1.1 billion (Dh4 billion) for a 14 per cent stake in PSA Peugeot Citroen, and also has a joint venture with Nissan for a plant in China.

Other Chinese automakers/brands such as Chery, BAIC and Geely had in the recent past signed up with local dealerships. Incidentally, AW Rostamani Trading had been representing ZNA, a maker of light commercial vehicles, for some time now. Another brand that it handles, the British label MG, is also owned by a Chinese company, Nanjing Automobile.

The UAE and other regional markets can be critical to get those plans going. In the local market, Chinese built models already have built up a sizeable share — estimated at 50 per cent — in tourist coaches. But on passenger cars, there is a lot of work to be done.

The 11,000 Chinese made units only made up 3 per cent of the 405,000 vehicle imports shipped into the UAE last year. But, according to Ayat’s estimates, that could grow to 70,000 units (if growth averages 10 per cent annually) out of an overall market size of 650,000 units (at an 8 per cent growth rate) by 2020, when the automotive retail sector would be one of the key beneficiaries of demand generated by activities surrounding the hosting of the Expo 2020 in Dubai.

Right pricing combination

“The biggest breakthrough that Chinese auto brands will have to bring about in this market is change buyer perception about their resale value and get it closer to or on par with Japanese made versions,” said Ayat. “Once that’s done, the higher volumes will follow automatically. The quality is getting better and so is the styling, and with the right pricing combination, sales can happen.

“In in the initial phase, we are targeting [value-conscious] first-time car buyers for whom pricing will be decisive. The B and C categories in the local auto retail market make up the highest volumes, and that’s where we see firm prospects for Dongfeng.

Simultaneously, we will also be aiming for a greater share of fleet sales.” (For both Dongfeng models, the dealership has an aggressive pricing option for fleet operators.) On whether there is a chance that Dongfeng would consider introducing any of its higher priced models, Ayat said: “Once the brand gets established, there would be a rationale to “homologate” [build to GCC specifications] upscale models for the UAE/Gulf. But, first, the volume models within the range should build up sufficient recognition among buyers.”


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